A mirage-like art market created by global “money glut”
The general public may not feel this with the COVID-19 ongoing pandemic, but the world is experiencing a “money glut.”
There have been several such bubble periods in the past, and all of them have eventually burst.
The bursting of the bubble in 1992 followed an extreme rise in land prices as banks expanded financing for real estate purchases, providing financing even to those without collateral. When quantitative easing was stopped in an attempt to halt the trend, the bubble quickly burst.
The collapse during the 2008 financial crisis was due to a large number of delinquencies on subprime mortgages issued to those with poor creditworthiness. The collapse was not caused, as it had been with the Japan bubble economy, by a cessation of quantitative easing but by a global credit crunch.
Now, in 2021.
Our current time is being called the “COVID-19 bubble.”
With the spread of COVID-19, countries have rushed to implement quantitative easing policies. The prices of stocks and crypto assets (cryptocurrencies) are soaring.
As of now, there is unlikely to be drainage of funds like there was in the past when Japan’s bubble economy burst. Compared to stock prices and the actual performance of companies, we are in a period of rising stock prices.
Against this backdrop, large amounts of money are being invested in contemporary art. The recently held Art Fair Tokyo 2021 (3/18-3/19/2021) was bustling with activity despite the absence of overseas collectors. Those who bought traditional antique art sat on the sidelines while Japanese IT titans began purchases of “contemporary art” as assets.
Two months before the fair. A work by Rokkaku Ayako was sold at an auction held by SBI Art Auction in Daikanyama, Tokyo for 26 million yen (excluding commission). The expected winning bid range was from 10-15 million yen.
As can be seen from this episode, vast amounts of money are floating amidst the mysterious stagnation of the COVID-19 pandemic.
I pray that it does become a repeat of a path we have already traveled.
IT entrepreneur enthusiasm for “art investment” drives large money flows in anticipation of rising prices | Toyo Keizai Online https://toyokeizai.net/articles/-/411740
The COVID-19 bubble is lowering the real value of money: How to protect your valued assets | New Horse Race-Loving Economist’s Deep Market Read Theater – Toyo Keizai Online https://toyokeizai.net/articles/-/415381